Stranded passengers wait at East London airpor in this May 2016 file photo: Picture: DAILY DISPATCH/MBALI TANANA
Stranded passengers wait at East London airpor in this May 2016 file photo: Picture: DAILY DISPATCH/MBALI TANANA

SAA will cancel all domestic flights, except for a reduced service to Cape Town, as well as some international and regional flights, at the end of February in a bid to further cut costs at the ailing airline. 

Joint SAA business rescue practitioners, Les Matuson and Siviwe Dongwana, said routes that would drive the restructured national carrier towards profitability had been retained.

This is the third time the airline has announced the cancellation of flights since being placed under business rescue, and comes after the practitioners told employees that they intend to expedite retrenchments at the airline.

In December, SAA went into business rescue after several years of heavy losses that necessitated perpetual bailouts from the state. It recently received a R3.5bn loan from the Development Bank of Southern Africa, which enabled it to continue flying, while business rescue practitioners prepare to restructure the company into what is hoped will be a sustainable business.

Continued bailouts of state-owned entities (SOEs) have been flagged by ratings agencies as a major threat to the country's economy.

On February 29, SAA will close services from Johannesburg to Abidjan via Accra, Entebbe, Guangzhou, Hong Kong, Luanda, Munich, Ndola, and São Paulo, the business rescue practitioners said. 

On the domestic route network, it will cancel flights to Durban, East London and Port Elizabeth. Domestic routes operated by Mango will not be affected by the changes.

They said all customers booked on any cancelled international and regional routes will receive a full refund, while those who booked on cancelled domestic flights would be re-accommodated on services operated by Mango.

SAA will continue to operate all international services between Johannesburg and Frankfurt, London Heathrow, New York, Perth and Washington via Accra.

Regional services to be retained include from Johannesburg to Blantyre, Dar es Salaam, Harare, Kinshasa, Lagos, Lilongwe, Lusaka, Maputo, Mauritius, Nairobi, Victoria Falls and Windhoek.

“The initiatives we are taking now will strengthen SAA’s business,” Matuson and Dongwana said. “We believe this should provide reassurance to our loyal customers that SAA is moving in the right direction. We are focused on our mandate to restore SAA’s commercial health and create an airline that South Africans will be proud of.”

They said SAA does not intend to make any further significant network changes. 

As to the job losses, the two said every effort is being taken to limit the impact. 

“It is our intention to restructure the business in a manner that can retain as many jobs as possible. This will help provide a platform to a viable and sustainable future. However, a reduction in the number of employees will, unfortunately, be necessary.” 

The two said that to improve the airline’s liquidity, rationalisation programmes are under consideration for SAA’s subsidiaries, as well as the sale of selected assets.

The business rescue practitioners said they will continue to explore viable investment opportunities with potential investors in respect of SAA. 

quintalg@businesslive.co.za